Following the release of the company’s interim results, Triple Point Energy Transition (TENT) announced that an orderly realisation of assets, and return of associated realised capital, is the most viable option to maximise shareholder value in the short to medium term. The announcement follows a comprehensive review of the options for the group and its prospects, drawing on independent financial advice, as well as shareholder feedback, with a view to determining the future strategic direction of the company
In the three years since its launch in October 2020 (“IPO”), the Group has worked towards achieving the goals set out at IPO including putting in place predictable, long-term cash flows and targeting total NAV returns of 7-8% per annum following full investment.
Despite making significant progress towards achieving these goals, the company has been significantly impacted by the wider macro-environmental pressures being experienced by a large number of its sector peers. This, alongside sub-optimal liquidity, has contributed to the company’s shares trading at a persistent discount to its prevailing net asset value since January 2022 which, in turn, has restricted the company’s ability to raise further capital and realise the benefits that come from greater scale. A key requirement identified by the company’s shareholders is the need for increased liquidity in the company’s shares which can only realistically be achieved through greater scale. This is difficult to achieve at the current discount to NAV, which, the board believes, does not reflect the intrinsic value of the portfolio, yet remains persistent and entrenched.
The board and the company’s investment manager, Triple Point Investment Management have maintained an on-going dialogue with a number of shareholders and have undertaken several measures to address share price performance over this period. Fundamentally, the group’s portfolio has performed in line with the objectives set out at IPO, exceeding the NAV return target in the most recent full year results to 31 March 2023 with a 1.1x covered dividend. The board believes that the company’s diverse portfolio of 20 assets is expected to deliver a stable and predictable return to shareholders based on its high level of contractually underpinned income over the next 13 years.
However, taking into account the company’s discount to NAV, its liquidity and current market conditions, the board engaged a third party to assess strategic options for maximising shareholder value. Having considered the report, the board – whilst remaining open to considering other strategic options – has determined that an orderly realisation of assets, and return of associated realised capital will optimise shareholder value.
The board will, therefore, be convening a general meeting of shareholders to seek approval for, amongst other things, the adoption of a revised investment policy and other related matters in order to facilitate the orderly realisation of the group’s assets and return of capital to shareholders. A circular setting out details of the proposals and containing a notice convening the General Meeting is expected to be posted to shareholders in Q1 2024.
Commenting on the announcement, chair, John Roberts, added:
“We have built a diverse portfolio of assets which are both generating robust, contractually underpinned cash flows in line with expectations supporting a fully covered dividend and contributing to the energy transition. However, we have listened to and recognise shareholder frustration at the Company’s undeserved, yet persistent discount to NAV. In view of the likelihood of continued market volatility and the negative impact that will have on our future ability to scale up, we have concluded that the best option to optimise shareholder value is to initiate an orderly realisation of the Group’s assets and return capital to investors, and, as such, will be making this recommendation to shareholders in our forthcoming circular.”
TENT : Triple Point Energy Transition to realise assets